"Energy firm Bulb set to go into administration"
www.bbc.com/news/business-59373198
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Energy company failures are largely down to poor/greedy management and poor regulation.
Companies made one or two year fixed price deals with customers, but mostly bought gas on the spot market. This allowed them to give competitive prices to customers by avoiding the costs of long term purchase commitments.
With the increase in gas prices, the revenues they signed up to no longer cover the costs. The regulator either knew this was happening and did nothing, or didn't know - both unacceptable.
The "lifeboat" - major providers agreed to take over customer contracts on existing terms. This worked when failures were infrequent and meant the larger energy companies suddenly acquired an extra customer base to whom they could then sell renewals.
The large companies now resent the very high cost of multiple failures and will no longer play ball it seems. The options - the government effectively pick up the cost, or they leave consumers in the lurch to find new more expensive providers.
Guess which is pomitically most attractive.
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From the radio this evening it reported that the 'government' have taken them over as no other company was able to absorb their customer numbers... how does that work?
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>>how does that work?
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AIUI, the firm is effectively nationalised with the administrators running it.
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>> major providers agreed to take over customer contracts on existing terms.
Is that supposed to be the situation. I had a very good fixed rate with my supplier, but the new supplier's rates are about double what I was paying and that is what I have been put on.
>>the government effectively pick up the cost, or they leave consumers in the lurch to find new more expensive providers.
I read somewhere, only a quick glance mind, that the failures are effectively costing all energy consumers c£100 a year extra to cover the lost payments.
Last edited by: zippy on Mon 22 Nov 21 at 22:55
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I was ported from Utility Point to EDF and my monthly standing orfer is now £114 instead of £99. Not an unreasonable increase considering that I was with EDF before changing to Utility Point two years ago and was paying £117 a month.
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>>I was ported from Utility Point to EDF and my monthly standing orfer is now £114 instead of £99.
I was also with Utility Point and I cancelled my direct debit immediately because I didn't want my money disappearing into a black hole. It was only later I heard I should have done nothing.
I've received a couple of emails from EDF, informing me they've taken over my energy supply and one asking for an electric meter reading, which I gave, but nothing about gas.
I've not had a bill or request for payment for over two months. I guess I'm gonna be clobbered!
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I was with EDF a couple of years ago and they had the annoying habit of increasing the DD periodically until they had built up quite a nice little positive balance.
My mum was also with EDF before she passed and after submitting the final readings they wanted about £150. A year later I received a refund cheque for just over £340.
Watch them like a hawk.
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Unless it varies by customer, with EDF just click the button when logged in that says "quarterly billing". No monthly DD, just pay in arrears for what you've used.
It's always offered me that anyway, and I've always done it.
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There was no option for quarterly billing on the rate I had. A condition for the cheap rate was that it had to be DD.
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Fair enough. I'm guessing whenever I changed tariff, I chose quarterly billing before it offered my options perhaps, so different situation. Maybe if you walk through the change tariff option without actually completing it might offer then, for comparison.
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I eventually ditched EDF, went with Eon for a year, and I'm now with Octopus who were then offering a very good tarif with a REST API to track my consumption half-hourly. Plus a little cash incentive as a welcome present shared between myself and smokie.
Good customer service too when my meter readings started going AWOL between me and them.
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>> Energy company failures are largely down to poor/greedy management and poor regulation.
No, it was, is, and always will be a business model with no future, with no control over the product source or supplier.
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I dislike that existing uneconomic terms are to be underwritten by the government (i.e. the taxpayers). Better to follow the practice of migrating to the capped rate as has happened to the millions of customers already migrated to new suppliers. Even that is a subsidised rate. Presumably there are legal and/or political factors that make this impossible so we have to suck it up.
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There are less than 6/7 Energy Providers - i.e. The produce gas and or electricity, maintain a supply network in parts of the country and have retail and commercial companies as customers.
The 20 + companies that have gone bust were Energy Invoicers not Energy Companies.
The Energy Invoicers bought gas & electricity in lumps of 30 minutes - prices go up & down by the 30 minute contracts and vary throughout the year.
The flaw in their business plan was that they were handing out contracts to both commercial & retail customers on FIXED contracts for up to 2+ years. If the wholesale price is steady they can make profits, if the wholesale price falls they make megabucks and it the wholesale prices rocket they go out of business.
Handing out fixed price contracts without taking out contracts of supply at fixed prices is foolhardy.
Banks will lend you ££s to buy cars, houses etc for fixed rates for say 5 years HOWEVER the banks have borrowed that money from other banks, finance houses etc at fixed rates and they make a small %age on every deal with little risk to themselves.
Sympathies for those who have or will lose their job. No sympathies for the speculators who thought they could take on the market with a flawed business plan.
The trouble is ALL the money lost will come back on our bills next year and for years after to pay out money lost by the bust companies.
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There are less than 6/7 Energy Providers - i.e. The produce gas and or electricity, maintain a supply network in parts of the country and have retail and commercial companies as customers.
The 20 + companies that have gone bust were Energy Invoicers not Energy Companies.
The Energy Invoicers bought gas & electricity in lumps of 30 minutes - prices go up & down by the 30 minute contracts and vary throughout the year.
The flaw in their business plan was that they were handing out contracts to both commercial & retail customers on FIXED contracts for up to 2+ years. If the wholesale price is steady they can make profits, if the wholesale price falls they make megabucks and it the wholesale prices rocket they go out of business.
Handing out fixed price contracts without taking out contracts of supply at fixed prices is foolhardy.
Banks will lend you ££s to buy cars, houses etc for fixed rates for say 5 years HOWEVER the banks have borrowed that money from other banks, finance houses etc at fixed rates and they make a small %age on every deal with little risk to themselves.
Sympathies for those who have or will lose their job. No sympathies for the speculators who thought they could take on the market with a flawed business plan.
The trouble is ALL the money lost will come back on our bills next year and for years after to pay out money lost by the bust companies.
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The speculators these days are unlikely to have lost a material amount of their own money, that isn't the way capitalism works now. Capital is quickly replaced by debt, with interest charges double those at which goverment could borrow. The losers in an insolvency are consumers, creditors, possibly banks, and this time the public purse.
Regulation (specifically consumer price caps) presumably has a part to play as well. Privatising these companies can really only be attempted with such regulation but what you end up with is a one way bet for the investors - the surplus if there is any goes to them, if it goes wrong then the losses hit other people and off they go to the next one.
Consumers have on various estimates benefitted from utility privatisations through efficiency gains but those gains tend to be very visibly linked to regulatory action, which makes one wonder how effective competition really is. The efficiency gains have not reduced real cost, which has increased faster than inflation. And events like these come along and wipe out the claimed gains.
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>>which makes one wonder how effective competition really is.
Depends at what you think it should be effective.
>>The efficiency gains have not reduced real cost, which has increased faster than inflation
I'd wonder about how real the 'efficiency' is, or at least how it is rewarded.
As a sort of aside, people seem to look at nationalised and regulated companies in the utility space that are limited to a profit of n% as a good thing.
It isn't. It is a bad thing.
A regulated profit of n% essentially means two things;
1) a guaranteed profit of n%
2) increasing spend will increase profit
Hardly encourages any good behaviour.
Nationalisation/regulation is a tricky thing and is not the be all and end all. And privatising them certainly isn't.
Regulated goal, performance and metric setting with penalties, which are not necessarily purely financial, typically is the answer.
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Gas prices are currently about double what they were six months ago. This impacts directly on domestic gas supplies and is a material part of the cost of electricity generation.
Government policy did not anticipate the rapidity of cost changes. If energy companies supply at the capped tariff they will lose money. Taking on the remaining term of existing customer long term contracts is even less attractive.
The only issue is how the problem is dealt with, how it is presented and who pays. The government could:
- simply say to consumers "your energy supplier has gone bust, you sort it out".
- immediately raise the price cap to ensure energy companies can cover their costs. All consumers coming out of existing contracts would face a material price hike.
- directly subsidise energy companies to take on contracts - very obviously a case of taxpayers money being used to prop up energy companies.
- temporarily take on failed energy companies and run them until (a) they can offload them on to a new buyer, or (b) simply run it down as existing customer contracts mature.
They are all unattractive - they have simply picked that which may be least worst!
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News reports suggest that the Govt have now bailed them out so they can carry on supplying customers as no other supplier was willing to take them on.
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I read that the gubbermint has set aside £1,700,000,000 to deal with the Bulb failure. Apparently they have 1,700,000 customers, so that's a nice round £1,000 per customer. Some bulb failure.
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According to a very informative e-mail from that nice Martin Lewis, as a Bulb customer I should do absolutely nothing. His message includes this: "Do not switch. No tariff is meaningfully cheaper, in fact most switchable tariffs cost 40%+ more."
So that means that, for the time being - though I expect it will eventually change - I am enjoying a 40% bonus, courtesy of HM Government, though perhaps that's not the best way of putting it.
Doesn't seem right, though.
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Wait for the claims for being treated unfairly by the Govt.
I.e. Bulb customers potentially get to stay on their subsidised tariffs. Many of the customers of other failed energy firms will have to pay more.
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"Wait for the claims for being treated unfairly by the Govt.
I.e. Bulb customers potentially get to stay on their subsidised tariffs. Many of the customers of other failed energy firms will have to pay more."
Thanks - yes, this is exactly what was in my mind.
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It’s not just losing the subsidised tariff but that our taxes are being used to subsidise the Bulb customers. We pay more for our power (fair enough) but also our taxes are used to extend Bulb customers subsidies (not fair).
As a self confessed rate tart I ended up with an unsustainable deal and lost out when they went belly up. Too bad. Quite why Bulb customers get protected I don’t know. It may be that as Bulb is still trading their customer contracts have to be honoured. To the tune of £1k per customer it seems.
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AIUI Bulb are in some sort of Administration but presumably still trading. Reason they're dealt with that way is that other companies won't 'lifeboat' their customers.
If still trading then likely bound by contracts to supply at impossibly low cost per Kw/H.
Next stop may be for government to set up a 'supplier of last resort' to which customers of Bulb and the next failures can be transferred at a more sustainable charging rate.
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As a bulb customer...
They were not offering particularly cheap energy - maybe slightly cheaper than the big 6, but they were focusing on customer service (and 'green' energy). They only had one tariff and it was variable, no 'cheap' fixed rates or tie ins, and were more or less at the cap. They have come un stuck because the Government's cap meant they couldn't raise prices to plug the gap between what they are allowed to charge / what they had hedged for. The funds that HMG is now providing are those that all the other energy companies are either swallowing due to their size, or are being passed on elsewhere (shareholders, who ever was left holding the baby when the energy actually had to be delivered, etc etc). Expect steep rises in energy prices when the cap is next reviewed (see that figure of £1000 per customer, that gives an idea of the 'real' price....) - current fixed rate deals are factoring this in, and are much more expensive than current variable rates - I checked for a switch to SSE, and they want c£3k / year, vs the nearly £2k we are currently paying. If the cap doesn't go high enough then more failures will follow.
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I assume Bulb customers are being treated like other customers of failed energy companies.
Stay on their existing tariff until it expires, and then have a choice of the capped rate, or a new fixed term on current commercial rates. As no companies are offering fixed price contracts below the capped tariff, the sensible default is to go to the capped tariff (which is what I have done).
The only change is that the taxpayer is picking up the cost of taking on customers from Bulb, as no other energy company is prepared to do so.
The government had a choice - leave ex-Bulb customers to sort out their own problems or step in as "guarantor" of last resort. As they created the "rules" that dealt with how failed energy companies are resolved, and failed to regulate them properly anyway, it seems only right they should take on responsibility.
An aside - the capped tariff is due to be reviewed in February with any change (increase??) implemented from April. As the cap is costing energy companies huge amounts it is plausible that any increase will be sufficiently high to restore profitability. It may then be worth reverting to a fixed price commercial tariff.
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I see that Orbit Energy and Entice Energy just joined the others in the gutter.
I can't help but feel the world is better for the passing of these companies.
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Let’s hope Octopus keep out of arms way
I’ve been rehydrating on gin, beer y vino for 4+ hours after a hot sweaty day cutting back overgrown hunters paths in the middle of nowhere.
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>> Let’s hope Octopus keep out of arms way
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...even if you're with Octopus, I think it's going to cost you a good few more squid if/when your fixed rate tariff runs out....
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My Octopus Gas tariff runs out at end Dec - 3.16p.
Options
- do nothing (goes Flexible Octopus to 4.13p but variable)
- 12m fixed (7.37p)
- Loyal Octopus rate (6.56p)
I don't think the Flexible one has any exit penalty so I can swap if it changes later on, but I'll check that
Last edited by: smokie on Fri 26 Nov 21 at 11:16
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7.4p/kWh for gas is a shocker. The last rate I signed up for was under 3p.
Would I be a sucker to go with them?
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Can't tell, but advice at the moment is to not change your supplier apparently.
If you want to switch I can give you my referral code, both get £50 which eases the pain :-)
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Octopus, sucker...oh please yourselves!
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Oh, straight over my head!!
HAHA :-)
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Citizens Advice have been looking at the gas/electric market an Ofgem's performance:
tinyurl.com/yzn6v4cy (link to CA website, url shortened to avoid screwing up the page)
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After my energy company went under last September, I was transferred to EDF. I received my first (estimated) bill today for £360, corrected to less than £300 when I submitted true meter readings. I'm pleasantly surprised. I was paying £80/month and expected my new bills to be much higher.
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www.bbc.co.uk/news/explainers-60289396
I thought it put this here. This story was on the news tonight, i was surprised at how long the payback was for some houses. There was a guy who paid £36,000 to insulate his house, floors, walls etc. The amount saved per year was about £180.
Seems a lot of money for little in return, no surprise few are rushing to insulate their homes at the rate required. I think it was less than 10% of the numbers required to meet emissions targets.
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As detailed here already I'm with So Energy. Until January I was on a 1 year fix called So Bluebell. At the end of that I was told I'd migrated to the capped So Flex tariff.
Last Saturday, after the new April cap rates had been announced, I had a look at So Energy's website to seek confirmation of how I might be affected.
Usually when I visit, eg to log my meter readings, I need to sign in. This time I was already signed in with the screen showing, on the left my current capped rates. On the right was a bright shiny invitation to consider whether I could save by going to their one or two year So Guava fixed rate.
Whilst there's nothing in public information from sources like Martin Lewis or Citizens Advice that any fixed rate deal is worthwhile I thought I'd see what the trend was compared to the post April Cap.
Literally two mouse clicks later, with no warning or anything clear about T&C or actual prices I got a welcome to your new tariff screen. From 05/02 I'm paying 37.08p for daytime electricity and 8.58p for gas.
The capped rates now are 21p and 4p respectively increasing to 28p and 7p from April. As they didn't take my February DD and the first under the new tariff is not due until March I' very rapidly accruing a mahoosive debit balance.
I feel I've been the victim of sharp practice. There should be not even a hint of being better off on a fix where that's patently impossible.
I emailed immediately as their phone lines are Mo-Fri and are apparently under unprecedented call volumes.
No reply so far.
What does the panel think I should do next?
Last edited by: Bromptonaut on Sun 13 Feb 22 at 12:40
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Go to another provider, I'd bet it'd be easier than getting it changed.
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>> Go to another provider, I'd bet it'd be easier than getting it changed.
I'm inclined to agree.
Smokie might be along shortly...
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Haha, whatever made you think that?
share.octopus.energy/open-camel-464 (£50 each) :-)
Seriously, you know as much about rights, complaining and consumer law as any of us here, if not more but do you not have a cooling off 14 days?
Tbh I don't know what I'd do. I think people in my family got caught by Weight Watchers on a similar kind of thing where a couple of clicks signed them up for something they didn't want but can't get out of, and is costing them (I think) £30 a month for 3 or 5 months. But they're keeping schtum about it (from me anyway).
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>> Haha, whatever made you think that?
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>> share.octopus.energy/open-camel-464 (£50 each) :-)
Octopus are doing it properly. Multiple warnings that changing is not in my interest and even if I persist I need to speak to them.
>> Seriously, you know as much about rights, complaining and consumer law as any of us
>> here, if not more but do you not have a cooling off 14 days?
I've access to information and experience but my knowledge of consumer stuff has dimmed after a lengthy period as a Universal Credit specialist.
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If it’s online are they not legally bound to give a cooling off period type thing?
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Bromp,
I'm with So Energy at the new house.
My Bluebell has run out and I declined the fix offered and I am currently on about 24p/day fixed and 20.86p per unit.
When I logged in just now I was presented with a page that that said something like "Do you want to lock in your rates?" and two buttons - "Close" or "Make the Switch".
Are you saying that if I had clicked the "Make the switch" I would have been transferred against my will?
I'm now looking at my tariff, and it says "You can save by switching today" and there's a "Get a Quote" button. Presumably I'll be safe to click it?
If the offer is 37.08p I'm inclined not to bother fixing at that and take my chance.
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>
>> When I logged in just now I was presented with a page that that said
>> something like "Do you want to lock in your rates?" and two buttons - "Close"
>> or "Make the Switch".
>>
>> Are you saying that if I had clicked the "Make the switch" I would have
>> been transferred against my will?
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>> I'm now looking at my tariff, and it says "You can save by switching today"
>> and there's a "Get a Quote" button. Presumably I'll be safe to click it?
That's exactly what I saw. Clicked get a quote which gave some very basic info.
Clicked again for, I thought, more detail and the legal stuff only to receive a confirmation message for my new tariff.
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To be fair, and on the face of it, clicking a button which says Make The Switch wouldn't appear to be doing anything against your will.
Tho I suppose a at least Confirm button wouldn't be an unreasonable expectation.
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Just to be safe - it may be better to use an independent comparison site rather than the energy company.
It may be worth waiting - assuming Ukraine does not erupt, the recent reduction in wholesale prices may be sustained as summer approaches with a chance (no guarantees) of fixed price deals below the new price cap.
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>> Just to be safe - it may be better to use an independent comparison site
>> rather than the energy company.
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>> It may be worth waiting - assuming Ukraine does not erupt, the recent reduction in
>> wholesale prices may be sustained as summer approaches with a chance (no guarantees) of fixed
>> price deals below the new price cap.
I guess that's true as I assume I'm out of contract having rolled on to flex. I did see the email offering the fix but the rates was so high I left it,
I have enough aggro at the moment. It took me 7 months to stop Scottish Power charging me first a standing charge for a meter I didn't have, and then for some gas, based on 'estimated readings', consumed via a non-existent supply.
I've already given up on trying to get my phone cable into a duct instead of overhead. I could have put a duct and cable in myself but I was warned they might not accept it. Instead Openreach said "no problem, we'll come and do a survey then we'll send you a quote for the work. By the way there's a charge for the survey of £345+VAT".
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I wrote again to So Energy making clear that I wished to exercise my 'cooling off' rights.
Reply yesterday accepts that and they've put me back on So Flex.
In process I think I've gained an extra month at the previous So Bluebell fixed rate from Jan 2021 which is a bonus.
I need to make a single payment to balance the account as, because of the change, they didn't take my February DD.
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Another energy company heads south for the winter - Terry
